How do you build loyalty with fickle online shoppers?

Flash sale phenom Gilt has elevated online shopping to a competitive sport. Start with a coveted set of products, hand-picked to entice – luxury goods for women, men, kids and home, direct from more than 6,000 partner brands, as well as unique local experiences. Offer them in limited quantities, discounted up to 60 percent – but only to an exclusive audience and only for a limited time.

The model works. Gilt was named by Fast Company as one of the Top 25 Innovative Companies – No. 1 in the fashion category. A pioneer in flash sales, Gilt leads this market category with more than $500 million in annual revenue – not bad for a company launched only seven years ago.

Tamara Gruzbarg, Gilt’s Senior Director of Analytics and Research

“We’ve been growing strongly and steadily year after year,” says Tamara Gruzbarg, Gilt’s Senior Director of Analytics and Research. Since inception, the roster of active members has grown from 15,000 shoppers to more than 8 million, a significant number of them invited by an existing member. “We started mostly through word of mouth. We have expanded our reach and acquisition strategies, but referral is still a very important membership acquisition channel for us.”

Members are actively engaged with Gilt: 77 percent visit 10 or more times a month; and 94 percent tell friends and family about Gilt. “When we create a positive experience, it not only creates loyalty among our existing customer base, but it ensures that our customer base is going to grow, because our customers are our biggest advocates and evangelists,” says Gruzbarg.

So, Gilt not only gets customers to join, engage often and buy, but also to be ambassadors for the brand. That’s loyalty.

How Does Gilt Do It?

Daily sales, limited inventory – and lots of customer data.

“The model of daily sales with limited inventory presents some interesting challenges from the perspective of ingraining customer loyalty,” says Gruzbarg. On the one hand, constant turnover of merchandise means customers get a fresh and exciting experience with each visit. On the other hand, customers could get frustrated when they see items they want but can’t get, because others beat them to the color, size or style they wanted.

How does Gilt balance that inherent tension in its unique business model? “Our answer is to use information to be relevant,” said Gruzbarg. “Because we are a membership site, we’re able to gain insight into what brands our customers love, what sales they’re engaging with the most, etc., and personalize their site experience every day. Every time a customer visits the site, we can gather data and create an individual customer profile, so we know not only what people are purchasing and how frequently they’re purchasing, but we also know how frequently they come to the site, what they look at, and what they’re putting in their carts and then potentially not checking out.” Gilt combines that with information from data partners to get insights into customer demographics and psychographics – a view into who the customers are, which is not limited by the Gilt walls.

Personal announcements of upcoming sales.

At 11:45 a.m. ET (8:45 p.m. on Wednesday and Sunday), members get an email reminding them that sales are about to start, with a preview of what’s going to be on sale that day. “When we have about 100 sales, obviously we are not going to fit all of them into the email template,” says Gruzbarg. If you can only show a few sales, the email should showcase the sales most relevant to that individual.

“We use a combination of stated and implied preferences to drive email and website personalization of sales,” says Gruzbarg. “This type of communication is very effective because we put our best foot forward, offering something that is really relevant to customers and will entice them to come to our site.” The algorithm that defines these custom emails is refreshed and applied every day – no small feat when you’re talking about 100 sales, millions of records a day and multitudes of possible combinations.

Personal sales collections.

A new initiative for Gilt is to take the idea of personally curated sales to a new level – to an audience of one. “The concept for our new ‘Your Personal Sale’ feature is that it’s not just about selecting specific sales and ordering them in the email in the way that makes sense for you, but creating a sale just for you,” says Gruzbarg. “It’s going through all the brands and styles that we have available that day and creating a sale tailored just for you. So we have millions and millions of these personal sales based on your specific behavioral characteristics, the brands you’re most interested in, your sizes, seasonality, etc.

“Both of these initiatives – and any other initiatives we are creating based on data – are being continuously tested and optimized. It’s an ongoing process, and we are very happy with the results.”

Tailored voice for individual personas.

Beyond traditional targeting, Gilt wants to understand customers at a user level, to use the right voice and convey the right message for that customer, says Gruzbarg. “Who is the person our merchandisers are sourcing products for? That’s important for us to understand. For that purpose, we created distinctive personas that help inform all marketing creative and buying decisions.”

A combination of first- and third-party data (such as behavioral, demographic and attitudinal info) helps to create a broad view of a customer well beyond a single aspect of their engagement with Gilt.

“We recruited people for focus group sessions based on our understanding of personas,” says Gruzbarg. “We listened to them talk about their lives and how they’re using Gilt – and then we adapted our understanding of the needs of these groups. Personas have been extremely useful across various functions in the organization. I keep hearing from people in diverse roles around the organization how they’re using the persona segmentation to help them with their jobs.”

In short, Gilt uses analytics to create a signature shopping experience with distinctive appeal for each of its millions of members -- even though they have different tastes, needs and values. Just ask the scores of loyal shoppers who will click to buy from Gilt this month.